The Competition and Consumer Commission of Singapore (CCCS) has conditionally approved the planned merger between Air India (AI, Delhi International) and Vistara (UK, Delhi International) after accepting commitments from Air India, its owner Tata Sons, and stakeholder Singapore Airlines (SQ, Singapore Changi). The authority's interest in the tie-up is the competitive impact it would have on flights between India and Singapore.
The conditional approval covers three aspects:
- the acquisition by a Tata-owned holding company called Talace Private Limited of all of the shares and voting rights in Air India from the Indian government, along with Air India’s 100% shareholding of low-cost carrier Air India Express (IX, Delhi International) and 50% of Air India SATS Airport Services;
- the merger of Talace and Vistara into Air India, with Air India as the surviving entity, and Singapore Airlines acquiring 25.1% of the enlarged equity capital of Air India; and
- the proposed commercial cooperation between the enlarged Air India entity and Singapore Airlines and the provision of scheduled flights between Singapore and India.
In its review, the CCCS identified some competition concerns, specifically on four routes where Air India and Singapore Airlines hold large market shares. These are between Singapore and New Delhi, Mumbai International, Chennai, and Tiruchirapally.
To help ease the concerns, Air India, Tata Sons, and Singapore Airlines made three commitments:
- to maintain capacity on the four routes at 2019 levels;
- to appoint an independent auditor to monitor compliance and submit a report for each year; and
- to submit an interim report that monitors compliance with the committed capacity levels for every three weeks of non-fulfilment.
A Singapore Airlines spokesperson told ch-aviation it welcomed the decision but that the merger remained a work in progress and subject to further foreign direct investment and other regulatory approvals, adding that it "continues to work with our partner Tata Sons to secure the remaining approvals from the relevant authorities to complete the merger."
ch-aviation capacities data reveals that Singapore Airlines has a 41.65% market share (measured by weekly seat capacity) on the country pair and its subsidiary Scoot (TR, Singapore Changi) has 13.76%, giving Singapore Airlines Group a 55.41% market share. Air India has 10.65% share and Vistara 7.32%. Tata-owned low-cost carrier Air India Express has 8.35%, giving the Tata carriers a 26.32% share on the country pair. Together, the two airline groups have a combined 81.73% market share on the country pair, with IndiGo Airlines (6E, Delhi International) mopping up the remains.
Air India hopes to close its merger with Vistara by the end of 2024. Singapore Airlines owns a 49% stake in Vistara, which it will exchange for a smaller stake in a bigger Air India.